The Kerala government will seek legal recourse against the alteration of the terms of reference of the 15th Union Finance Commission that places the onus to share the defence and internal security expenses of the Centre on the States too.
Finance Minister T.M. Thomas Isaac confirmed to The Hindu that the government had sought legal advice to seek remedy to the alteration of the terms of reference (ToR) that would impose additional financial burden on the State governments and also dwindle the resources being apportioned from the divisible pool of taxes.
Kerala has taken the lead to mobilise State governments, including those ruled by the Bharatiya Janata Party and as a first step in this score is organising a national seminar in New Delhi on September 14 to elicit expert opinion on the way forward.
Post-flood fatigue
The Central government direction to introduce additional terms of reference to the finance commission is reported to be unprecedented and Kerala that is weathering a grave financial crisis will be the worst affected. Any further cut in the Central transfers from the divisible pool would further worsen the fiscal health of the State government and now a last-ditch effort is being made to contain the crisis.
The recurring flood coupled with the sluggish growth of the State’s own tax revenue as against the estimated growth of 23.86% in the current financial year have rattled the State’s financial base and is feared to seriously impede the post-flood rebuilding plans.
Changes in the ToR have come at a time when the State is availing itself of a loan of $500 million each from the World Bank and the Asian Development Bank and also apportioning ₹12,000 crore over the next three years from its spartan resources to fund the rebuilding initiatives.
The State government is also consistently persuading the Centre to provide additional borrowing space for Kerala and other States that are battling the ravages of the flood.
